Even if you really know your way around a 1040 tax form, chances are you are leaving money on the table every year. The good news is there are multiple tax deductions that you can find by looking at your family expenses, home expenses and the money that you spend every year for your job too.
9 Commonly Overlooked Individual Tax Deductions
According to H&R Block, nearly 4.1 million tax payers leave money on the table when they prepare their tax return at the end of the year – and that’s just unclaimed education tax benefits. In many cases, it only takes a few simple changes to your return to claim money that is owed to you. To help you maximize your tax refund, ask yourself the following questions before you file:
1. Did your parents pay the interest for your student loan? Provided that you are no longer their dependent, you may be able to deduct up to $2500 of the money that your parents paid on your student loan.
2. Are you self employed? If you work at home, you may be able to deduct the cost of running your home office. For example, the utilities that you use for your office and necessary supplies, like your office computer, are all examples of home office deductions.
Just remember to only deduct costs incurred by your office and no more; being too deduction-happy can trigger an audit. In addition to work expenses, you may also be able to deduct your work-related travel expenses and any health insurance expenses that you have.
3. Did you have to look for a new job? If you had to search for a job, then you can potentially deduct the expenses that you incurred while seeking employment, like gas for travel.
4. Were you required to relocate for your job? Relocation costs as a result of a new job contribute to another deduction that many people overlook.
5. Did you contribute to any charities? If you donated to a charitable cause using cash or check, then you can use that as a deduction. It’s very important to keep records of any donations you have made.
6. Are you responsible for child care or care of any dependents? Although this is a tax credit and not a deduction, it’s also frequently overlooked by many people who are solely responsible for the care of a minor or other dependent.
7. Did you incur any medical or dental expenses? Medical expenses related to a legitimate medical need and the cost of dental care can all be deducted at the end of the year if they exceed the threshold.
8. Do you or any of your children require special accommodations because of a medical condition? Similar to deductions related to medical expenses, if you or your dependent(s) required any special accommodations as a result of a medical condition, then you may be eligible for a deduction. An example of this would be the cost of tuition for a special education class for an autistic child.
9. Did you take the time to itemize your deductions? This is one of the first things that should be done to ensure you are receiving the maximum amount of money back from your tax return; unfortunately, it also happens to be the most frequently overlooked way to get the most out of tax deductions because it involves extra work.
Final Words on Finding the Most Overlooked Tax Deductions
In most cases, it’s recommended to have a certified tax professional look over your return before filing, especially if you are planning on using any of the above deductions. Although some are straight forward, like cash contributions to charities, other deductions can be very tricky to figure out – like self employed office expenses. However, don’t let that put you off from finding out if you qualify to use any of the most overlooked tax deductions.
To be clearer regarding the health savings account, will the IRS allow me to take medical deductions if they exceed 7.5% per year that I pay out-of-pocket and not use my health savings account?
Pete Morris says
I believe that the IRS rules on the home-office deduction have been changed–made easier–for this year (Tax Year 2013). This concerns the portion of your home that you use exclusively as your business office. Other aspects of a home business, such as equipment specific to your occupation, can usually be deducted regardless of whether you claim any space for the home office.
Neal Frankle, CFP ® says
I have an HSA that I choose not to pay my medical expenses from the account in order to build up the HSA fund and use for medical expenses in retirement. Can I deduct my medical/dental expenses that I pay out of pocket if I exceed the threshold?
Neal Frankle, CFP ® says
Do you itemize?
On the medical expenses – I know it lists the percentage, but would it be a good thing to keep a record of the costs anyway (who really knows if they meet this until the end of the year?) Also, would you include pharmacy bills or not?
Neal Frankle says
Sure…it doesn’t hurt to keep those records…..
Certainly going to use the running of a home as a tax expense next time round..
Medical and dental care can not just be deducted. If your medical/dental costs exceed 7.5%, the amount above that can be deducted.
Neal Frankle says